Should Value Investors Buy Fomento Economico Mexicano (FMX) Stock?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Fomento Economico Mexicano (FMX) is a stock many investors are watching right now. FMX is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FMX has a P/S ratio of 0.91. This compares to its industry's average P/S of 1.26.

Finally, we should also recognize that FMX has a P/CF ratio of 11.34. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. FMX's current P/CF looks attractive when compared to its industry's average P/CF of 22.01. FMX's P/CF has been as high as 12.51 and as low as 8.17, with a median of 9.85, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Fomento Economico Mexicano is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FMX feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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